From sticking with poor products to incurring unnecessary fees, are you making any of these common banking mistakes? These deadly sins of banking could see your money stagnating or even shrinking – if your balances heads into the read.
SIN 1: Paying unnecessary fees
Are you still paying monthly bank account fees? Fees to use another bank’s ATM? Overseas transaction fees? If you answered yes to any of these questions, it’s time to switch accounts. These days you can find bank accounts with all manner of fee-free offerings, like zero monthly fees, free ATM use and free overseas transactions. There’s even an account that will pay you 5 per cent cashback on contactless purchases under $100 for six months!
SIN 2: Not earning enough interest
If you have cash savings, make sure they’re working hard. Your savings should either be working to earn you the maximum amount of interest possible, or saving you money by offsetting a home loan. Mozo’s latest data shows that a savings account needs to pay as least 3.5 per cent interest to beat inflation and tax. Right now, only 25 per cent of ongoing interest rates are above this level – are you one of thousands of Aussie savers actually going backwards?
SIN 3: Not shopping around for better financial products
Don’t miss out on a better rate or pay fees just because you’re too lazy to shop around for better financial products – staying with a bank because it’s convenient is a poor excuse for wasting money. If borrowing, don’t just consider the big four banks – plenty of smaller lenders have excellent products, and are often backed by a larger bank anyway. You can easily compare products and find the one that best suits you.
SIN 4: Not taking money out from the right ATMs
Most banks will charge a withdrawal fee if you’re not a customer and you use one of their ATMs. Planning your cash flow and taking appropriate amounts out from your own bank’s ATMs will save you up to $5 per withdrawal and balance enquiry. Alternatively get cash out for free while shopping.
SIN 5: Only paying the minimum credit card repayments
Credit card debt is bad debt, and only paying the minimum amount each month can see you taking decades to pay off your card. Make sure you pay more than the minimum each month to down this debt ASAP and regain your financial freedom.
You worked hard to earn your money: It only takes a little more effort to make sure it’s working for you. It’s very easy to switch banks these days – you can do so online from the comfort of your own computer.
Kirsty Lamont is a director of Mozo.com.au, which helps Australians compare savings accounts, credit cards, insurance and other financial products. Kirsty was one of the launch team for Virgin Money when it started in Australia in 2003, and also held a senior role at BankWest before joining Mozo in 2007.
This article first appeared on Women in the Black.